Many aspiring home owners were able to boost their savings during lockdown, as they avoided expensive commutes and fast food lunches – however, experts claim there is more to getting on the property ladder than having a large stash of money.
Property experts from around the UK shared their top tips for first time home buyers to provide the ultimate guide for making what is perhaps the most expensive purchase many people will have made in their life.
From researching the market, boosting your credit file to gathering evidence of affordability, the experts say buying a home is more complex than simply choosing a pretty property.
Here, FEMAIL reveals the top ten things to consider before investing in a house…
1. BOOST YOUR CREDIT FILE
Property experts from across the UK reveal their top tips for first-time home buyers (file image)
Alex Hammond, director of Unlocking Property said: ‘There are three main credit referencing agencies in the UK that lenders will look at. These are Equifax, Experian and TransUnion. Most people will use Experian to check how they perform and it is probably the best option for a first-time buyer. You can use it to view your credit score for free, and if it is Good or Excellent, well done, that should be enough.
‘There are infinite articles online on how to improve your credit score, but the Money Advice Service list is one of the best, If you have a low credit rating, there are several things you can do to improve it:
- Register on the electoral roll. If your name’s not on there, you’ll find it much harder to get credit. Go to the GOV.UK website to find out how register to vote online or by post.
- Check for mistakes on your file. Even having just a slightly wrong address can affect your score. So make sure you check all the details and report any incorrect information straight away.
- Pay your bills on time. Paying a phone landline or internet contract on time is a great way to prove to lenders that you can manage your finances.
- Check if you’re linked to another person. Having a spouse, friend or family member’s credit rating linked to yours through a joint account could affect your personal rating if they have a poor score.
- Pay off debt. Ideally, you should pay off any outstanding debt before applying for new credit. This is because banks, building societies and credit card companies might be hesitant about lending you more if you already have a lot of debt.
2. SAVE, SAVE, SAVE WITH THE HELP OF AN LIFETIME ISA
Property developer Mandy St John Davey, recommends regularly checking for government schemes, analysing the market and staying in contact with your mortgage broker (file image)
Alhagi Malang of TopCashback said: ‘The ONS currently calculates the average house price in England at £256,000. With most mortgages these days requiring at least a 10 per cent deposit, this means most first-time buyers will need to save at least £25,600 to buy their first home.
‘With the Help to Buy scheme no longer accepting new accounts, the lifetime ISA is the best alternative for savers looking for a government boost. Simply put, LISAs give you a 25 per cent bonus on what you pay in, up to £4000 every tax year. That means if you put in the maximum amount of £4000, you’ll receive a tidy £1000 tax-free bonus. However, do note that you have to be aged 18-39 to open an account.
3. BE READY TO SHOW YOU CAN AFFORD TO PAY THE MORTGAGE
Fergal Lynch of Chill Insurance said: ‘Make sure you have acceptable evidence of affordability
‘This will be examined by your mortgage provider to ensure you can afford the repayments attached to the mortgage you have been offered, and can include a detailed analysis of your recent spending and savings patterns and rent payments.’
‘For first time buyers, the catch was that if you withdrew your balance for any reason other than buying a home, you’d be charged 25 per cent of the amount taken out. However, this has now been cut to 20 per cent until 6th April 2021 – so whilst you’ll still be penalised, it essentially means you’ll just be losing your bonus.’
4. RESEARCH THE MARKET
Property developer Mandy St John Davey said: ‘ Take a good look at the market before you rush out there. How far will your budget stretch? Which areas can you afford to live in?
‘Once you have established this, thoroughly research the area you wish to buy in and do look into government schemes to help you.
‘Why? Your dream might be to own a detached house but the difference between a detached house and a semi detached property for example might be significant and unaffordable. Similarly a recently renovated modern terraced property with a large garden might be worth considering and will always be easy to sell on once you have outgrown it, but do take someone with experience with you when viewing older properties and do take out a home survey before buying.
‘Are you looking for a flat or apartment? If so consider the ongoing maintenance costs and do you have any control over these costs? They might be just affordable at the purchase of the apartment but can increase overtime especially if there are outside spaces, pools and gyms attached to the buildings.
‘Research all the options available to you and if there isn’t anything out there that can help you right at this moment in time – don’t be put off. The mortgage world is fast moving and a competitive arena and lenders are constantly developing new products and introducing new rates to keep up with the economic climate. Do keep checking the market and keep in touch with your mortgage broker and check out those government sites regularly.’
Speaking about the current market, she added: ‘It is actually a good time for first time buyers, with income, to enter the property market. Interest rates are low and it looks like it will remain low for some time. First Time Buyers are also currently exempt from paying stamp duty (on properties under £500,000) which is an added bonus.
‘There has been much speculation about whether the property market will crash in 2021 and house prices drop in the first/second quarter of the year, however nobody is actually sure this will happen and are unable to predict this. So my advice to first time buyers would be to move forward but carefully consider their current financial situation and long term financial security. Do not overstretch themselves, for example, maybe consider not taking the maximum amount a lender will lend them, but purchase sensibly.
‘Consider a smaller affordable property now which will allow them more financial stability if the market/situation does change. The property in time will hopefully increase in value and that increase in equity can then be used as cash to move up the property ladder in the future.’
5. ENLIST THE HELP OF A MORTGAGE ADVISER
Alex Hammond of Unlocking Property, warns estate agents don’t represent the buyer, therefore it’s important to negotiate the best deal (file image)
Robby Du Toit, Director at SellHouseFast.uk, said: ‘Top tips I’d give would be to first and foremost enlist an experienced mortgage advisor. It is worth making sure you contact a few and choose the one you have the most confidence in, in order to get yourself the best mortgage deal possible. Always ensure you have a solicitor appointed too, so that once you’ve made an offer and it gets accepted, you can get straight on with the often-lengthy process.
6. FIND THE RIGHT SOLICITOR
Alex Hammond, director of Unlocking Property, said: ‘In the same way in which you source a mortgage broker, try and get recommendations from friends and family on a good local solicitor to act for you in the purchase. It is often worth talking to a few to get quotes and find someone you feel like you can communicate well with.
‘Over a third of sales that are agreed in England fall through, this is often from poor communication with solicitors or the agent – so keep both on side as much as you can but never be afraid to ask questions. If you are buying a flat, I would always recommend to get a Homebuyers Survey – you can often do this through your broker, and upgrade the usual valuation the bank will carry out as standard. If you are buying a house, you may want to consider a more thorough buildings survey’
‘When working out your budget make sure to remember all the extra costs such as stamp duty (if applicable), legal fees and surveyor costs and of course any renovation costs a property might need! Many prospecting buyers neglect to think about these and tend to over stretch themselves when they find their dream home.
‘Finally, it’s important to write out a list of your specific priorities and what is important to you in a potential house and area, for example good schools, fireplace, high ceilings, transport links etc… This will make it easier to see what you are willing to compromise on. No house has everything, as first-time buyers will quickly learn when searching for their perfect property!’
7. SPEND MONEY ON CONVEYANCERS
Kate Hathaway, residential property solicitor at Keystone Law said: ‘All homeowners remember buying their first home and scraping together every penny to actually buy the house, living in a half furnished place etc. The temptation is therefore to choose the cheapest service available for everything else; removals, van hire, conveyancing.
‘When it comes to conveyancers, generally speaking, you pay for what you get in terms of attention, experience and contractibility – you are buying the most expensive asset you are ever likely to own so make sure you have the best possible team on your side.
8. BE REALISTIC
Kate Hathaway, residential property solicitor at Keystone Law said: ‘The moment your offer is accepted is exciting; most people can remember where they were when they got the call to say that their offer had been accepted on their first home. However, from that point the work really begins! You will need mortgage brokers and advisors, surveyors, lawyers – all of whom will need instructions from you.
‘No-one likes delayed gratification and waiting for exchange and completion is both anxious and frustrating, but the average time from offer to moving day is currently in excess of 100 days. If you go into the process with your eyes open, you will find the whole business much less frustrating and stressful.’
9. CONSIDER RE-SALE VALUE
James Stanton, Property Director and Managing Partner of Hoxton Property said: ‘Buying a first home can always be daunting… you will naturally be making a decision to live there for some time but remember your circumstances may change in the future (i.e growing family).
‘Make sure the property has good re- sale value; defining qualities such as: close to amenities, transport links, parking, schools, or the ability for the property to be rented out to the hugely growing UK rental market. It’s important to remember it won’t be your last purchase… choose and buy wisely!’
10. PICK THE BEST TIME TO MOVE
Fergal Lynch at Chill Insurance added: ‘Although, on the face of it, the best day to move house is completely subjective and depends on your own personal circumstances, Friday tends to be a most popular moving day.
‘Providing a gateway to the weekend, booking a Friday off work to complete your move allows for three consecutive days to deal with any unplanned issues, unpack and generally start to get settled in your new home.’